Sree Iyer: Namaskar, Hello and welcome to episode number 111. Today is 4th March 2021. I am your host Sree Iyer, with me is Sridhar Chityalaji. Namaskar, Sridharji, and welcome to PGurus Channel.
Sridhar Chityala: Namaskar and very good morning to everybody.
Sree Iyer: In our news today main points are that Mike Pence the former vice-president break silence, he says that the democratic election bill that is now doing the rounds HR1 is an unconstitutional power graph. The ex-vice president has finally broken his silence over the conduct of the 2020 election also expressing some fears. In other news from the US and Latin America, Blinken highlights China as the biggest threat of the 21st century in his first policy speech. So, now we are seeing that the Biden Administration is more or less aligned with the Trump Administration as far as China is concerned. What are your thoughts?
Sridhar Chityala: I think I tend to agree that they are following on a policy basis the consistency in terms of the approach which is adopted by other the Trump Administration. The question and challenge that is in front of the world are whether the US will follow through with its policy with on-ground action. Thus far, it seems that there is a possibility that it may choose to do but, the nations around the world be it in Asia or in Europe are not taking any chances and they are preparing themselves in the South China Sea and from Indo-Pacific all the way to Indo-Africa or African region deterrent mechanisms by building a combination of military power.
Sree Iyer: An Asia expert says that the quad countries that are United States, Japan, Australia and India must forcefully challenge China. So I think most of Asia is now coming around with the viewpoint that the quad alliance is important and that it is necessary to deter China, don’t you think so, sir?
Sridhar Chityala: Agree. I think that as you recall during the last days of the Trump Administration there is a delegation from ASEAN, that visited and that met with Trump reaffirming his commitment and support and also making sure that there is a continued US support in the event of your political change that the South China and that the broader Indo-Pacific military threats are mitigated and there is a continued military investment by way of resources in the region.
Sree Iyer: Now, Mike Pence breaks silence, Democrats election bill is unconstitutional power draft. Now, we touched upon this yesterday that is that HR 1. Is he mentioning the same one or is he mentioning any other bill?
Sree Iyer: He is exactly mentioning the same. On the first glance, on the Second Glance, on the third glance when you look at it, without being overly critical one has to say that this almost looks like, you know Fidel Castro or Hugo Chavez or Xi Jinping or any of the Russian Czars ruling from the centre. It is like Xi Jinping says is everybody in Hong Kong to wave the red flag and there’s no question of any Democratic principles. I think we discussed this at length yesterday. So, these people are saying the policies for the elections will be set, the determination of voter ID and voter ID procedures would be set, who speaks to whom, what they speak will be set. And effectively the rules and frameworks will be set and established from the centre and including the security measures whether states have no role to play, except the conduct of the elections or the norms established at the centre. So I think is a far-reaching agenda and when one looks at it, the fact that today Mike Pence has looked at it and make a comment is very reflective of the wrong direction that the Democratic Party is taking the country to. Not even the first 60 days, we are not talking about a hundred days, in the first 60 days the problems around the whole electoral process.
Sree Iyer: Now, the house has approved the candidacy of Shalanda Young over Neera Tanden who withdrew from this. Now, there is a bit of history behind why Neera Tanden withdrew her candidacy. And I believe and I could be wrong about this, correct me if I’m wrong, but she was very close to the Hillary group and in the 2016 elections she is alleged to have made some very scathing remarks in other camps which were the Bernie Sander’s camp and look like this is payback time, at least that’s how it looks to me. I could be wrong, but, looks like the Democrats themselves sank her nomination.
Sridhar Chityala: Well, I think that there were obviously objections from the internal. This is internal progressive versus non-progressive or progressives versus the rest type of the agenda. Just small a correction Shalanda Young is the Deputy. She’s being proposed as a replacement for Neera. Your observations on Neera are quite right. There are also objections from the Republican side. So, it is quite conceivable some of our policies and some of our outbursts seem to reflect is not gone well with Republicans either.
Sree Iyer: That’s probably true. In other news, Border Patrol releases 108 illegal immigrants with coronavirus. Looks like they have been released into the United States or out of the United States. It’s not clear to me, but it’s just a scary thought.
Sridhar Chityala: There is a policy called Catch, Detain and Deport. Now, the policy is Catch and Release. So, catch and release is where you catch them and you release them into the main system of the United States and the 108 is the number of people who were detected with coronavirus but no record has been checked about any kind of background and clandestine history and you know, whether they are a potential threat to the risk to the society all those kinds of things. But, what is worse which is breaking news, which we discussed before we got on the show, there is close to almost 2,000 people in one Texas border crossing. They have been caught in the past three days in one crossing. So, we have no idea how many people are coming in and we talked yesterday about one tent being cleared which is comprising of roughly 69,000 people and then two more tents have been pitched up on the Border.
Sree Iyer: And the FBI has said that there were no firearms recovered during the January 6th Capitol attack and Militia group that was planning an attack on March 4th. They also don’t seem to have found any firearms there. So, it is now kind of buried, is this all going be forgotten and you know in the rear-view mirror.
Sridhar Chityala: Well, it seems to be a consistent pattern. I think the two things here one, they yesterday officially announced that those who were caught, couldn’t find any firearms. So, therefore and I think Christopher Ray had made several statements which we covered. We also heard last night that there is an imminent attack today in Capitol Hill by unknown Militia groups. They have not stated. Lindsey Graham was asking is it this? is it this? is it this? No, we don’t know but it’s unknown. So therefore there seems to be what I call an information dissemination mismatch or information gap, but somehow some facts are known that something by somebody is likely to happen, it seems too far-fetch to me.
Sree Iyer: In India news, the Indian ban on Chinese app merits global support. I think India is the only country that took this bold step. I think we should tip our hat to Narendra Modi for this bold step, after all, you know, India so dependent on so many products of China.
Sridhar Chityala: Well, I think two areas, I think Modiji has taken a tremendous kind of leadership one is around taking this bold move around the Chinese apps. Is also taken a bold move around stopping specific imports from China and the third one which is totally indigenous to India the toys and some of many kinds of things close to the fourth fore of the Indian ecosystem, he is now bringing it back and I think they are investing a significant amount of money to do that. And finally, India is again, India is the country that is leading, now many other countries are following suit Australia is second. And on basically regulating the tech Platforms in terms of their behaviour, so you can see leadership stand by India in some of these very sensitive but very important domains.
Sree Iyer: The Philippines would become the first export customer of Brahmos missiles for India and many other countries expressed interest. Brahmos is a very top of the line missile from India, isn’t it?
Sridhar Chityala: It is the top-of-the-line missile from India and you know, it has multiple Well, you know launch capabilities. It is also nuclear-capable the fact that the Brahmos missile will be stationed after it is formally kind of, I think they have signed the agreement with it. It’s all as a deterrent in the South China Sea with one nation, which is threatening that, is China. Indonesia, Thailand and Vietnam are waiting in line to follow the Philippines in terms of acquiring these capabilities.
Sree Iyer: Now, the Spectrum auction has ended with Reliance Jio being the biggest acquirer at 57,122 crores. Nitin Gadkari urges car manufacturers to make flex engines indigenously for better use of alternate fuel. So, India is making a conscious attempt at moving away from Petrol and India also if you remember that India is one of the fastest installations of solar energy panels in the whole world. And Indian Minister takes local jab Covaxin over AstraZeneca led by the Prime Minister. And finally, vaccines are now going to be available 24/7 that is all through the week, all through the day in some stores in India. And we also going to show you a small chart and then I let you expand on these things, Sridharji, about how vaccines in India compared with the rest of the world and the vaccine graphic up there, sir. So the most expensive in China, Coronavac, in China it costs Rs.2200 per dose, in the United States, the BNT 162 is Rs.1400 per dose. EU mRNA-based 1273 is Rs.1300, the Russians Sputnik is Rs.730. Saudi Arabia CovidShield is Rs.390 and all the way down in India’s Covaxin or Covishield, it doesn’t matter which one you take both are 250 rupees. This is a magnificent feat because in my opinion sir, this is going to make India the leading vaccine supplier and this covid virus is mutating. I think this is going to be like a, you know, a recurring business for a while. Pharma companies should be buying their stock. I am sorry to waive in on that. Go ahead, sir.
Sridhar Chityala: No, no, I think that it’s a great context that you have set. Just for the benefit CoviShield, if I’m correct is the AstraZeneca version.
Sree Iyer: Right.
Sridhar Chiyala: Biotech is the Pfizer version, I think and then the Covaxin is the Indian version or the Indian equivalent. These are all prices that are available for Indian users at that price. These are also available to foreign suppliers at this specific price. So many of them are ordering and acquiring the supplies from India manufactures who retail into many of the countries making the overall cost of vaccine very attractive. Rs.250 is less than four dollars in retail price. Okay, less than $4 around $3.5 of that ilk. And India is also home to 60% of vaccines manufactured in the world. On the covid, they are making their way up there still number two on the ladder for the covid-19 vaccines. But India is the manufacturing hub for vaccines in the world. So, it is already well on the way if this covid turns out to be the recurring for the global then, India has built a very good captive kind of a business. One of the days, we will talk about Hydroxychloroquine in my view the WHO may have banned but it is still extensively used in a number of countries including India as part of the protocol, but, we’ll discuss that on a separate day.
Sree Iyer: In South Asia News, India exposes Pakistan in UNHRC giving pensions to the designated terrorist. Would this be FATF implications, sir?
Sridhar Chityala: This has one of the elements which would be a FATF that is basically money laundering and money transmission, which is done for supporting various kind of terrorist programs. But this is also a reflection of the nurturing of the terrorists not eliminating these terrorists from their paraphernalia. That means there is no enforcement of law if you’re going to be paying them pensions. So I think it’s an embarrassment. But, of course, Pakistan knows how to combat it. It is very diplomatically savvy in terms of managing these issues.
Sree Iyer: And in other news, Srilanka after cancelling the Eastern Container Terminal agreement offers a vessel container agreement with Japan and India. I hope it’s not a monkey balancing act, sir.
Sridhar Chityala: It’s not. I think the Eastern one if you recall we covered it, there were Union issues that propped up. It was to go to India and Japan, and the Union issue propped up. We contemplated whether it could have been triggered by the Chinese nevertheless the Western Port for the Western Container has been given. So, therefore, India and Japan have established a foothold.
Sree Iyer: Bangladesh has said that it is under no obligation to accept stranded Rohingya refugees. So does that mean that the Rohingya refugees are going to be pushed back into the Rohingya land of Myanmar?
Sridhar Chityala: At least to the extent of what the Bangladeshis are saying is that they’re not going to keep these people because they are a potential threat notwithstanding the belong to a similar faith or the same faith. What concerns everybody here is especially the many what you call intellectual liberal what you should or liberal pundits in the United States who think that CAA should be abolished and the National Register for Citizen should be abolished basically to accommodate these type of people. The infiltration of Rohingyas is very profound in India. So who knows they may pave the way and if you have very misaligned parties, they may say, ‘okay, we find the route and bring you.’ Wherever would it go? Assam is the first pod of call, which is not too far from the border and then go into some of the Northeastern states and then make their way. So this is a real problem as to how India and Bangladesh are going to tackle this if Bangladesh itself declines their footprint or presence in their soil. Again in Myanmar, they don’t want them either because they have been creating problems. This is one of the probable domains of issues between the Junta and Aung Suu Kyi.
Sree Iyer: In Asia news, Biden is headed in the wrong direction as far as North Korea is concerned. Who made these statements? And why?
Sridhar Chityala: This is a statement which is made by an independent analyst and especially Asian thinkers. They are saying that confronting North Korea and not imposing sanctions is not a way by which you can tackle it. Trump kept him quiet by giving him the importance and by dialoguing with him and keeping all his actions within his territory rather than stirring the earnestness and bringing him into the mainstream and up until then he was firing missiles at Japan, he was firing missiles at his neighbour and he was creating potential kind of problems in the DMZ and the border areas. So, therefore, I think that by saying we will do this will do that will do this. But when Trump took over he called him to Singapore. They have had a chat and he was in hibernation for four years. Now he has woken up.
Sree Iyer: Suu Kyi supporters urge governments not to recognize Myanmar Junta. Now, the main reason behind why the Junta has usurped power is that they were afraid that the people have more or less recognized Aung Suu Kyi as the legally elected representative to rule Myanmar, isn’t it?
Sridhar Chityala: Well, I think that is always a conflict between the dictators or the Army and Martial law relative to the formal democratic process. So I think over a period of time this may peter-out, but they would not like to see a democratically elected leadership that has supersedence over the Junta as you said. So, therefore, I think that was the balancing issue and which resulted in her being ousted.
Sree Iyer: In other Asian News, Japan extends the state of emergency by two weeks in the Tokyo area and weighs banning visitors to Tokyo Olympics. ASEAN eyes digital vaccine certificate for post-covid travel.
In Europe News, Russia tells the EU and the US not to play with fire after the US imposes fresh sanctions on the country. We talked about this yesterday. The United States bomber flies over the Baltic states in its show of solidarity. I am going to stop here and ask for your input on this. The last time there was a Democratic administration in place they used to fly these bombers but no bombs in them.
Sridhar Chityala: I will be surprised if the strategy is anything different. At least, the first thing that they did was to have a carrier they are passing the Taiwan Straits expressing solidarity with Taiwan. So, at least they got that one right. Now, this is post-G7 meet which was facilitated by Boris Johnson and the multilateralism that EU and Boris Johnson were campaigning for and with Russia as the common footprint and with Navalny’s issue some things have sprung up which effectively means that Biden is back. There is this favourite theory, which is everything that Russia does is anti-democratic. So from a strategic security point of view, Russia is the problem, not China, which is the strategic blunder of the previous Obama-Biden Administration. So that ploy continues. So in Express Baltic states are ones which spun off so they flew the bombers on top of to say, ‘we are here and we are back.’ There was no military footprint because Trump was withdrawing NATO because it said, it is beyond the cold war, no relevance and nobody pays. Now it’s time, those countries which are fairly economically well-developed should be self-supporting and basically looking after their own borders.
Sree Iyer: Now European Navy’s Indo-Pacific presence has concerns mount over China. We have France, Britain, Germany, and perhaps the Netherlands all beginning to join in this endeavour. Sir, I will come to you in a second, we are running a little late, so I’m gonna try and see if I can pick up some speed here.
Denmark becomes the first EU nation telling Syrian refugees to return home. We are very sure that it is going to continue because we saw what has been happening in France. We talked about this yesterday. So this is now a real and present danger, the immigrants. If there’s still any kind of infraction of the law, I think they will be asked to leave the country wherever they are.
An explosion at a Dutch covid centre appears intentional according to the police. Citing a lack of data the Polish health minister does not recommend Chinese vaccine. A lot of stuff happening in Europe, sir.
Sridhar Chityala: A lot of stuff is happening around Europe which is consistent as the covid situation improves the main policy issues are coming to the forefront. That’s why you’re saying a fair amount of action.
Sree Iyer: In markets, stocks pull back as the bond yields jump again. Sir, quickly give us a one minute overview of where the stock market headed today and what you will see for tomorrow and then we can talk a little bit about the Hong Kong IPO pipeline that is swelling as the Chinese companies are rushing to list there because I have a question on Hong Kong about so-called Hong Kong dollar, so please continue sir.
Sridhar Chityala: So as far as March 3rd the stock markets finished lower on the back of these interest rates inching up. We went to less than 1.4. We are now approaching close to 1.50, 1.47 is the number but that varies 1.46, 1.47, 1.50. So obviously you felt tremors as a result. The tech stocks naturally took a hit. You can see the NASDAQ went down by 360 points and DOW Jones went up by 119 points. The crude as you can see, the WTI is in 61 and Brent is at 64. So you can see that movement of crude prices as a result of this the bond movement issue. So I think what you’re seeing today, which is the 4th of March, the early indications point to markets being a little bit of an uptick.
Sree Iyer: Let’s take a look at the impending IPO of many companies in Hong Kong’s exchange. Sridharji, why would a Chinese company want to do its IPO listing in Hong Kong? Why not in Shanghai?
Sridhar Chityala: Well, firstly I think Hong Kong is one of the most established markets. The exchange is highly automated and capable and it is also connected to the global clearing and settlement systems. So the market operates in a very efficient and effective manner. Only after, the suspension of democracy and forceful occupation and forceful demonstration against the descent by Democratic members within the Hong Kong, countries began to impose a ban on activities in Hong Kong progressively. One of the areas that they imposed was around the trading and listing of companies and, of course, you saw many companies got delisted from NYSE at NASDAQ as well, mostly NYSE. So they all made their way back into Hong Kong. So to me, I think Hong Kong is a natural proposition for the Chinese to do the listing and now there’s no competition from many global companies. So everybody flocks to it. But it has established principles and footprint from conducting training and exchange business.
Sree Iyer: Would they list in Hong Kong Dollar or Renminbi, sir?
Sridhar Chityala: I think initially they probably listed it in Hong Kong dollar and then it will progressively make its way into Renminbi or they will do dualistic. It is both, you know, Renminbi and but, you can settle with the Hong Kong dollar. Because there are a lot of companies still in the HK Dollar they’re not all being rolled back. So it takes a little bit of time only new listings have been stopped and the old listings, may kind of phase space themselves out as time moves on.
Sree Iyer: Now, who is setting the exchange rate between the Hong Kong dollar and the Renminbi, sir?
Sridhar Chityala: In the case of the Hong Kong dollar and Renminbi it’s the Chinese government.
Sree Iyer: Is the world accepting that, Sir?
Sridhar Chityala: Do they have a choice?
Sree Iyer: See that is the thing that I always wrestle with because the Hong Kong dollar is supposed to peg with the US dollar. In other words, this peg and then that is also peg that means you are indirectly saying that it’s okay for the Renminbi to be at whatever per $1 something like that.
Sridhar Chityala: Well, it’s interesting you raise this point because China is now contemplating in a which is this whole concept of one country two systems policy as a democratic practice. So, in other words in China is one country it’s part of China. In China, you don’t have the same flexibility and rules as you would have in Hong Kong. So it’s conceivable having made your false step. They’re trying to pull back. So it is conceivable that they could down the path keep the HK Dollar fully kind of what you call Independent rather than being pegged to Renminbi. You can take over a country and you can apply your rules and then you say okay. Your currency is dealing from us, but everything else is linked to us including who waves the flag in the legislative Council or the Hong Kong assembly. So you can have, so you may choose to get down that path and you are seeing something similar in a much more aggressive manner in Tibet. So Tibet, Hong Kong and Taiwan are in three different phases or iterations of the integration into Mainland China. Tibet is going to completely swallow they have no voice, no say nothing unless the US had intervened, the US Choose not to intervene. I don’t know. The US choose to take an aggressive posture had not intervened. There is bipartisan support in the United States to make it an integral part or at least have some kind of autonomy in certain areas, but you know, we will know in the next few years is to get a how all these things is going to pan out. So as far as the HK Dollar being independent and currencies and stocks being listed it’s not a fait accompli, but things could change.
Sree Iyer: This is where I see that the Democrats have sort of lost the plot. Now, yesterday or the day before yesterday. We reported that Goldman Sachs and JP Morgan want to go back and expand their offices in China. If there was any pressure that they could have brought and said nothing doing, you’re not going to do that until the Hong Kong democracy rights are restored. The US didn’t say that anyway, we’re going to see how this thing plays out. The last thing before we wrap up international flights still banned into India till the 31st of March and we’ll have to wait and see if they will open it up after that. I think there are some flights that are going but these are all more like emergency purposes sort of thing. And I think it’s Air India that’s flying from many cities. You need to check the local restrictions and rules if you want to buy a ticket and so on and so forth. Be careful, do your homework and then you decide your plan. And with that, we bring the end to today’s segment of DGI. Thanks for watching, please subscribe to our Channel as always a pleasure to have you with us, sir. And he will be again back tomorrow. Same time, the same place.
Sridhar Chityala: Thank you. Have a wonderful day.
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